Apple’s earnings show declining iPhone sales, average returns in second quarter

apple earnings q4 2017 logo
Apple, the world’s most valuable tech company, had a pretty average second fiscal quarter. Despite a new iPad, a bright red iPhone, and a bevy of new Apple Watch bands and other accessories, Apple only slightly beat Wall Street’s expectations on revenues — and it missed on sales.

After the closing bell on Tuesday, Apple’s reported revenue of $52.9 billion versus an expected $53.02 billion — $2.10 per share versus $2.02 per share. Apple’s software and services — including AppleCare, Apple Pay, and digital content sales — brought in $7 billion, but device shipments dipped or remained unchanged across the board. The company shipped 50.8 million iPhones versus a projected 52 million, and Mac and iPad sales held at 4.1 million ($5.84 billion)  and 8.9 million ($3.89 billion), respectively.

Apple CEO Tim Cook credited the growth in revenue to “robust demand” for the iPhone 7 Plus. But despite a colorful new Product (RED) iPhone, the company failed to make a major splash in an industry suffering a sales slowdown. According to a survey conducted by 451 Research, smartphone buying intent among North American consumers hit a nine-year low.

Falling sales in China did not help. Fierce competition from Oppo, Vivo, Huawei, Xioami, and other regional brands drove iPhone shipments down 12 percent in the country compared to the same quarter a year ago, and analysts at Warren Capital estimate that the region saw a two percent decline in overall smartphone activation.

An ill-timed buying cycle contributed, too. Venture capitalist Gene Munster estimates that as many as 300 million iPhones may be set for an upgrade later this fall, when Apple is expected to announce new models.

apple ipad 9.7 2017
Julian Chokkatuu/Digital Trends
Julian Chokkatuu/Digital Trends

If there is a silver lining, it’s Apple’s “other product” category, which includes the Apple Watch, iPods, Beats headphones, and other accessories. It raked in $2.87 billion — much better than the $2.26 billion analysts were expecting.

More good news? Potentially lucrative developments lie on the horizon.

Apple is dipping its toes into content creation with Planet of the Apps, its first original show. It will be available exclusively to Apple Music subscribers later this year.

A new Mac Pro is on the way. Apple’s Phil Spencer told Buzzfeed News that the company was “completely rethinking” the high-end workstation after a lukewarm reception to its last refresh in 2013.

And there could be a new product line on the horizon — or several. Rumor has it that Apple’s readying a high-end, Siri-powered home speaker that will compete directly with Amazon’s Echo series and Google’s eponymous Google Home. It could launch as soon as June at Apple’s worldwide developer conference.

Apple’s autonomous car project, meanwhile, is ongoing. In late April, white Lexus SUVs outfitted with an array of sensors and cameras were spotted emerging from an Apple facility in California — one of three vehicles the California Department of Motor authorized Apple to test earlier in the month.

apple iphone red
Julian Chokkattu/Digital Trends
Julian Chokkattu/Digital Trends
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